• September 2, 2014

Corporate Giving Slow to Recover as Economy Remains Shaky

Cash donations rose in 2010, but big companies expect a flat year ahead, a Chronicle survey finds

corporate giving 2011 main story art

Tom Pietrasik Hyderabad, India

Goldman Sachs, second among cash donors in the survey, is supporting the education of female entrepreneurs like Anagha Kulkarni (center), an alumna of the New York bank's 10,000 Women program.

Charitable giving by America’s biggest companies will probably be flat in 2011, after a sharp rebound in 2010, according to a Chronicle survey of 180 of businesses.

Cash giving rose by 13 percent, a relief to charities after the recession caused a decline of 7.5 percent by companies in 2009.

When companies add the value of product donations to their cash giving, the figures for 2010 look even stronger. Viewed that way, giving rose nearly 20 percent. Seventy-four of the 107 companies from the Fortune 500 that provided projections said they expect this year’s giving to remain about the same as last year’s. Twenty-seven expect total giving to increase, while six expect a decrease.

The Chronicle’s findings reflect how the shaky economy is challenging grant makers, say experts. “It’s kind of a mixed bag right now,” said Mark Shamley, head of the Association of Corporate Contributions Professionals, a trade group in Mt. Pleasant, S.C., that represents company grant makers. “Most companies are just holding steady.” He said he expects it will take at least until 2013 for companies to give as much as they did before the recession took hold at the end of 2007.

Among the other key findings in The Chronicle’s survey:

  • Cash donations totaled $4.9-billion last year, up from $4.3-billion in 2009, according to figures provided by 113 companies.
  • Wal-Mart’s $319.5-million in cash giving was higher than all other companies in the survey. Wal-Mart is also making a notable commitment in food and other noncash gifts, pledging to provide $1.75-billion over five years to food banks and other organizations that provide groceries to the poor.
  • The Goldman Sachs investment bank surged into second place with a 353-percent increase in its giving, to $315.4 million. Other financial companies also posted notable increases as their corporate profits rebounded last year. Citigroup, which needed a government bailout to survive the downturn, rejoined the list of companies giving more than $100-million in cash.
  • When ranking companies by the combined total of their cash and products, Pfizer topped the list by giving $3-billion in cash and products, followed by Oracle ($2.3-billion) and Merck ($1.2 -billion).
  • Fifty-eight companies increased their overseas giving by 20 percent last year, donating $3.8-billion, compared with $3-billion in 2009.

Keeping the Lights On

The downturn has changed both how companies give and what charities tell businesses they need.

Tim Hanlon, president of the Wells Fargo Foundation, said he and his colleagues at other companies receive many requests from nonprofits that want help to cover everyday expenses, such as utility bills.

“That’s been a very big shift,” he said. “Organizations are coming to us with basic keep-the-lights-on requests. That’s a topic that’s getting a lot of conversation” among corporate grant makers.

The trend started in the economic downturn, as grant sources dried up, and shows little sign of letting up, Mr. Hanlon says.

Before the recession, he says, charities generally sought strategic, long-term grants from the foundation.

Keeping up with increased demand from charities will be a stretch in 2011, Mr. Hanlon suggests.

Wells Fargo increased giving by 8.5 percent in 2010, and the bank’s $219-million total made it the third most-generous cash donor in the survey. Still, that’s less than the $226-million the San Francisco firm donated in 2008, the year it merged with Wachovia.

Wells Fargo predicts flat giving levels for 2011, given the economy’s state.

The weak recovery isn’t just changing what charities want from corporations. It’s changing what and how corporations give as well. Many corporate grant makers say the weak economy is strengthening their determination to use their limited charitable dollars in a more focused way.

Many are continuing to cast off charities and causes that don’t match their business objectives and looking at what skills, products, and other services they can offer to help good causes as cash has become tighter.

For example, at Wells Fargo, Mr. Hanlon says the company is working with the Taproot Foundation, a charity that specializes in connecting nonprofits with business workers who have useful skills. Wells Fargo is hoping Taproot can help company workers volunteer their time and expertise to charities that provide credit counseling and mortgage help.

Pfizer has been increasing donations of drugs such as Lipitor and Celebrex to people who are uninsured or underinsured due to job losses.

Such donations are a big share of Pfizer’s $3-billion in giving; only $69-million of its giving was in cash last year, and that was a 15-percent increase after three consecutive years of declines.

Caroline Roan, president of the Pfizer Foundation, says that cash giving jump is not a sign of the times; Pfizer won’t increase its cash budget at all in 2011, she forecasts. But that doesn’t mean Pfizer expects to make less of a difference through its giving.

“I don’t necessarily think 'more’ is more,” she says. “You can give less if you do it really effectively and if you focus on impact.”

Even Wal-Mart, the top cash donor, is putting more effort into figuring out how its employees and skills can help society. When it announced its $2-billion, five-year effort to fight hunger last year, it made clear that most of that donation would be in food and only $250-million would be in cash. It also said it would focus more attention on assuring its money makes a difference.

For example, the company plans to marshal its workers’ expertise to teach food banks how to operate more efficiently.

“Gone are the days when people can just put money behind a good idea,” says Michelle Gilliard, a senior director at the Wal-Mart Foundation. “We want to support good ideas, but good ideas that have an impact.”

Biggest Donors

Despite the sluggish recovery, eight companies reported increasing cash donations by more than 50 percent. The biggest increase was Goldman Sachs’s 353-percent jump, which came even as its pre-tax profits dropped 35 percent.

Critics have questioned whether Goldman Sachs increased its charitable giving in hopes of blunting heavy criticism the company has taken in Congress during probes into the banking crisis. A Senate panel, for instance, issued a report in April accusing the company of betting against the housing market while it sold mortgage-related investments to clients.

Goldman officials say the three efforts fueling their surge in gifts—a donor-advised fund, and programs to help female entrepreneurs in the developing world and small businesses in the United States and Britain—have been in the bank’s plans since before the crisis.

While they declined to say whether they anticipate an increase in giving this year, Goldman officials said the projects are long-term commitments. The donor-advised fund, which seeks contributions from employees, was announced in early December 2007; the program for women in March 2008; the small-business effort in December 2009.

The bank’s 10,000 Women program, which offers business education to women in developing countries, is a five-year, $100-million effort that has served 5,000 women business owners in 22 countries. Seventy percent of participants say their businesses have increased revenue, and more than half have added jobs.

“We’re pleased to see early signs of success,” says Dina Habib Powell, president of the Goldman Sachs Foundation.

Other financial-services companies also increased their giving as they emerged from the banking world’s near-collapse.

Citigroup expects to see its giving jump in 2011. “Citi and the rest of the financial industry are doing better,” says Pamela Flaherty, president of the Citi Foundation. “We’re feeling good about where we are and even better about the future.”

JPMorgan Chase’s cash giving surged 77 percent, to $185-million, driven in large part by $42-million the bank committed toward helping groups that support charter schools and small-business development.

The spending was part of a plan the bank had been developing before the recession, says Kimberly B. Davis, president of the JPMorgan Chase Foundation. As for predicting this year’s giving levels, she adds: “It won’t be a decrease. I think I can commit to that.”

Peter Bolton and Caitlin Harrison contributed to this article.

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